Ovum: Pay-TV strategies must reflect evolving market landscape

Changes in market conditions and consumer behaviour are forcing dramatic shifts and an uncertain future for the pay-TV industry, according to independent telecoms analyst firm Ovum.

In a new report – How do Operators Keep Consumers Paying for TV? – Ovum suggests that new technologies and players offering alternative ways to view video are undermining the established order of pay-TV operations.

The study also indicates that pay-TV subscriber growth is slowing in several markets, with free-to-air digital TV and web-based offerings luring consumers away from traditional pay-TV services.

According to Jonathan Doran, Ovum principal analyst and author of the report, while these changes have already started to occur, their impact will become increasingly pronounced over the next five years. “This will force a shift in the strategic approaches of pay-TV operators if they are to ensure their continued success and survival,” he predicted.

“In isolation, none of the challenges faced by traditional pay-TV operators present an insurmountable barrier. Many operators have demonstrated their ability to fight back against these threats by rapidly adapting to the changing environment and turning challenges to their advantage. However, when combined, these disruptive factors represent an evolution in the TV market landscape that cannot be reversed,” he advised.

Ovum’s report offers several recommendations for pay-TV players to help them survive these significant shifts in the competitive environment.

Firstly, it advises operators to review existing approaches to content packaging so as to ensure that they are providing choice and quality to consumers. Doran suggested that to offset the increasing homogeneity of TV offerings, operators must adapt their portfolios through creative and shrewd packaging and pricing initiatives. “Service providers will need to continually review and revise their content offerings in order to accommodate consumers’ evolving and increasingly fragmented preferences.”

The report also advises players to exploit triple-play opportunities, employ new user-experience enhancements, and emulate and outdo competition from adjacent operators. “As subscription-free alternatives and paid propositions from adjacent players improve in range, quality, and user experience, pay-TV providers will have to work harder to attract and retain customers,” he recommended.

“Where possible, operators should strive to exceed the levels of choice, flexibility, and personalisation offered by their Internet-based competitors. This will involve developing services that resemble open, web-delivered offerings, while at the same time differentiating from over-the-top players based on service quality, reliability, and device interoperability,” he concluded.